Member Info for Agricore

@0715

maybe your experience of buying/selling property is radically different to mine but it usually takes time. Especially if you want to sell at market price. Remember there's no cashflow gun being held to RGL's head and it appears that the August 2024 bond will be refinanced at higher rates. It simply requires patience and trust.

Last year's Q3 trading update was 10th November so we can expect news in around 3 weeks.

@Toad "work from home 100% of the time, apart from a once a month trip". So not 100% of the time then. Loose language.

Thank you for your advice about considering other opinions. If I cared nothing for other opinions why would I be here? To espouse a soliloquay? It's an odd criticism to make as is "sitting on the sidelines". Forming an opinion is fundamental to successful investing.

Questioning other peoples' loose language and throwaway comments and the substance behind these is part of forming that opinion too.

For example, when you say "all reits (UK/US) are being smashed" - is that actually true in the present tense? For example NYC is up, AIRE is steady. I don't dispute prices have fallen over the past year including of course for RGL. If you look at REIT NAVs then the use of the word "Smashed" appears even more dubious - REITs appear to be reporting steady NAVs or gentle falls - even RGL. And achieving asset realisations at or above their book values (which would be the canary in the mine to future NAV falls). Where's your evidence that "Smashed" applies in the present - is there a single REIT you can quote which in their 2023 Q2 or Q3 results/update you can use the word "SMASHED"?

And "prices are in freefall" - I evidenced a 3% quarterly drop in the NAV of a similar office REIT to RGL yesterday. Is freefall an accurate description for a 3% drop? If it were 30% then you could use these words with justification. Or are you ignoring the NAVs and simply referring to share prices? Which returns to my point that sentiment and not fact is driving share prices right now - i.e. RGL is over sold.

I don't disagree more people work from home more of the time. And that it is more normal. Yet I also observe there is a counter pressure now to get teams collaborating face to face and also the realisation that junior staff cannot build their careers as effectively working remotely. Therefore where people speak (generally) to an ongoing decline in the use of an office it's just not what I see. Nor what I read. Nor what the experts say. For example Savills speak to a return towards pre covid levels in office occupancy levels.

(Source: https://www.savills.co.uk/research_articles/229130/347698-0)

As does LSH:

(https://www.lsh.co.uk/explore/research-and-views/research/2023/july/ukit-q2-2023?listing=true)

Hi Damofarl, FAIR is still going strong. In fact I would point you towards the September update of 2 days past. 1.4% NAV increase month on month. My partial exit and averaging down on DEC hasn't yet proven a wise move, to do the opposite that you did has been a better move. For example in their last update the increase in resilience at FAIR is striking "US loan default rate decreased from 1.55% to 1.27%". The discount to NAV, too, has narrowed from around 15% to 10%. All bodes well for the months ahead.

https://www.fairoaksincome.com/~/media/Files/F/Fair-Oaks-IF/Fair%20Oaks%20Income%20Fund%20-%20Sep-23.pdf

Toad,

Just don't think *much* higher interest rates are a possibility.

Why?

Indebtedness.

Both private and public. And across all major economies. All at once.

In other words the decelerative effect of current rates and even a further 0.25% interest rate will ratchet a dramatic change. Why? Because of the fiscal effect leading to deeper deficits and taxation to balance the books and/or a loss of confidence. Interest payments are 5.2% of government spending in the UK.

In my work life, I see many businesses whom I speak with on a daily basis pursuing hybrid workplace policies which mean 2 or 3 days out of 5 in an office. Does that mean reduced levels of office space (smaller offices) - yes. Does that mean less office working relative to say a year ago? No. Does it mean planning offices able to cope with variable and peak demand? Yes.

Combined with the corresponding reducing supply as new build levels of offices have also reduced and change of use increases, again I'm not seeing this "generational 'sea-change'" to the extent you're reading about.

0715

"17% over the year" using the comparable you would need to compare the 31/12/22 RGL valuation of 78.1p so arrives at a comparable valuation of 64.8p for RGL (78.1p*83%)

Meanwhile over at AEWU today: AEWU Office assets like for like valuation for the (July-September) quarter -3.34%

RGL share price movement over the same period -37%

Using RGL's IFRS NAV of 72.5p (as at 30/06/23) deflating that by an assumed 3.34% arrives at 70.1p. Comparing to the 27.5p share price puts RGL on a 60% discount to NAV.

Or using your Town Centres movement for 2023 arrives at 64.8p which extrapolating to RGL's NAV arrives at a 57.5% discount to NAV.

No matter how much "bad news" I read and that people share I can only see it's already priced in.

When I then also consider the "not so bad news" which is also appearing in the Commercial Office Real Estate sector and where I've shared example after example, it's not priced in..... at all.

Henry Hub is now over 50% up from its $2/MMBtu lows. While DEC is predominantly hedged, big swings and variations in price help DEC lock in puts at advantageous rates.

This article suggests regardless of the current Middle East crisis, there are solid future fundamentals for LNG

https://www.zerohedge.com/commodities/top-japanese-energy-trader-warns-world-running-short-lng-energy-transition

Quite how we remain at 74p in the face of the current MD crisis, the immediate winter season and net zero energy outlook is very difficult to rationalise.

Couple of key phrases in the RNS:

"revenue in excess of £100 million" - remember this is just the first half of a growing year, the idea that ED's forecast revenue would be £204m seems too low.

"Adjusted EBITDA of no less than £15 million" so the forecast EBITDA of ED of £29m full year seems too low too.

"the Group's four other categories that have, without exception, all reported strong revenue and gross profit growth."

The words I pick out are WITHOUT EXCEPTION so that's growth in all of batteries, lighting, sports and household.

This along with their proactive actions today, are extremely positive. I bet you the SUP team watched that recent Panorama episode on Vaping and had a Board Meeting straight after - and today is the outcome from that meeting. Well played.

Maybe the author Tinkberbell Mwila can give Leon a wish and make the $250m appear

Https://www.londonstockexchange.com/news-article/SERE/property-portfolio-valuation/16167154

More evidence that the recent drops at RGL are an overreaction

Gla

Notrex,

don't think you understand how BBs work. The NOMAD manages them not Rusty nor anyone at DEC directly. That's the rules.

Https://open.substack.com/pub/theoakbloke/p/jlp-jubilee-but-not-jubilent

Northern,

You go live after commissioning i.e. November although Roan continues at a reduced rate throughout so remains "live" even in October.

I agree the key points in the Annual Report you highlight are positive.

Effectively people are focused on today's (backward looking results) and appear to ignoring the "post period" new (albeit announced 6th June 23) which points to an even stronger FY2024, and people pontificating about "when's the next supercycle" and "when will prices recover" kind of miss the point that JLP is able to withstand even a severe famine (of prices) due to its low cost strategy.

What caught my eye in the annual report was this from Leon:

"The latest laboratory scale work has shown encouraging results that exceeded Jubilee’s initial expectations in recoverable copper. The results achieved at laboratory scale have motivated the upscaling of the trials

into both continuous process runs to confirm the results .......... If successful, Jubilee will have the unique

ability to target these tailings for the entire copper industry in Zambia. The Jubilee development team is driving to present the results from these trials before calendar year end 2023 "

It's not like JLP's expectations are low, so to say these are being exceeded is very encouraging news I think.

GLA

My forecast was 10% above H2 actuals. Actual EBITDA £24.8m vs £28.25m

But considering the circa 20% YoY drop in both PGM/Oz and Copper/Tonne pricing the underlying performance is actually stronger than I forecast.

Plenty to feel pleased about based on my initial read of the results.

FYI: (from Primary Bid)

Dear Agricore,

MicroSalt IPO: deal update

Many thanks for your application for shares in the IPO of MicroSalt Ltd (to be re-registered as a public limited company and renamed MicroSalt Plc).

We are writing to you to confirm that admission of MicroSalt’s ordinary shares to trading on AIM is expected to take place on 18 October 2023 (and no later than 10 November 2023, as communicated at launch). Your allocation will be confirmed closer to the admission date. In case of any changes, we will update you accordingly.

Not forgetting when you say "the diamonds" that there are 2 sources of diamonds - inland - Deep Blue and marine - Walviskorp. Nor forgetting the 8% interest accruing over the remaining $8.15m owed. Nor forgetting that in the coming months there will be a visibility over the 2.5% of revenue royalty over all Lithium and Tantalum mined by Aftan - i.e. once Xinjian get mining.

This article covers the various aspects: https://open.substack.com/pub/theoakbloke/p/kazera-investments-kzg

Hi Bjn, assuming if Stewart1964's quality percentages are immutable and correct:

RGL is on a 25% discount to its 40% quality pegging.

GCP is near par to its 40% one.

TRIG is 4% discount to its 20% quality pegging.

I said if.

My point was "Quality" is what exactly? Stability of dividends? Stability of NAV? Stability of earnings? Growth of earnings? It's a "Moat" if you follow Buffett. It's qualitative. It's whatever people collectively think it is.

I'll make 2 further points:

1. What moat does GCP and TRIG have exactly? (I don't actually know the answer to that by the way, but my perception would be that infrastructure and renewables are fairly generic assets with generic (albeit inflation-linked) returns, and that newer wind turbines are cheaper to build and therefore there's a degree of obsolescence to those assets). Meanwhile the opposite is true with RGL. Newer commercial offices are subject to HIGHER build costs and generally rising rents. New supply subject to planning. Political interference comes into this comparison too. When did Commercial Offices last have a windfall tax?!

My original point was the value of assets are always relative to their return. When TRIG yields 6.7% and RGL yields 18% and if they can do so sustainably, which assets will drop in price or increase in price going forward?

I appreciate I did say IF a second time and that's perhaps the reason RGL is yielding 18% for now, but I just think it's reached a point of oversold relative to what I see as its future earnings.

Hi all, I was faced with a dilemma yesterday. I felt compelled to average down with DEC's drop in price, and poor FAIR took the brunt of my reallocation. I still hold here but at an 80% reduced amount. I know there are some DEC holders here too, Damofarl, I think you are, so I thought I would share my new blog with you:

https://theoakbloke.substack.com/p/dec-the-halls

I mention FAIR in this other post, although, I'm contemplating doing a full-on analysis on FAIR in the future.

https://theoakbloke.substack.com/p/do-you-love-dividends

Sbjb,

The great thing about Meta, Ray Ban or whoever is by giving coverage to this category it opens up the market. Just because you and I as TEK investors know what smart glasses are, doesn't mean the masses do. Yet.

Lucy only needs to catch a small slice of the eyewear market. Many people use online reviews and LUCY compares really well here. e.g. https://theoakbloke.substack.com/p/innovative-eyewearlucyd-part-of-tek

Hedgehog, Harry Hyman isn't joining BELL's board.

That's a really good spot on selling BELL and buying TMTA to convert back to BELL.

Whether it's worth doing is covered in this article: https://theoakbloke.substack.com/p/bell-onging-together

Because after you earn £500 interest your 6.2% interest becomes 3.7% with no capital growth

I’d rather hold real assets sheltered in an ISA or SIPP

As to the quality of assets, supposedly defensive utilities have had an awful year even where they’re covered by CFDs and even in inflation proof contracts

So is quality is a qualitative measure and not a quantitative measure?